Mutual Fund Summary Prospectus (497k)
30 August 2013 - 8:02PM
Edgar (US Regulatory)
Matthews China Dividend Fund
SUMMARY PROSPECTUS—INVESTOR CLASS
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April
30, 2013
as amended August 30, 2013
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TICKER: MCDFX
Before you invest, you may want to review the Fund’s Prospectus,
which contains more information about the Fund and its risks. You can find the Fund’s Prospectus and other information about
the Fund online at matthewsasia.com/prospectus. You may also obtain this information at no additional cost by calling 800.789.ASIA
(2742) or by sending an e-mail request to prospectus@matthewsasia.com. The Fund’s Prospectus and Statement of Additional
Information, both dated April 30, 2013, are incorporated by reference into this Summary Prospectus.
Investment Objective
Total return with an emphasis on providing current income.
Fees and Expenses of the Fund
This table describes the fees and expenses that you may pay
if you buy and hold shares of this Fund.
SHAREHOLDER FEES
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(fees paid directly from your investment)
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Redemption Fee (as a percentage of amount redeemed on shares sold or exchanged within 90 days after purchase)
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2.00%
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Maximum Account Fee on Redemptions (for wire redemptions only)
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$9
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ANNUAL OPERATING EXPENSES
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(expenses that you pay each year as a percentage of the value of your investment)
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Management Fees
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0.67%
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Distribution (12b-1) Fees
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None
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Other Expenses
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0.80%
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Administration and Shareholder Servicing Fees
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0.15%
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Total Annual Fund Operating Expenses
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1.47%
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EXAMPLE OF FUND EXPENSES
This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment
has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:
One year:
$150
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Three years:
$467
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Five years:
$805
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Ten years:
$1,759
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PORTFOLIO TURNOVER
The Fund pays transaction costs, such as commissions, when it
buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover may indicate higher transaction
costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual
fund operating expenses or in the example of fund expenses, affect the Fund’s performance. During the most recent fiscal
year, the Fund’s portfolio turnover rate was 21% of the average value of its portfolio.
Principal Investment Strategy
Under normal market conditions, the Matthews China Dividend
Fund seeks to achieve its investment objective by investing at least 80% of its net assets, which include borrowings for investment
purposes, in dividend-paying equity securities of companies located in China. The Fund may also invest in convertible
debt and equity securities. China also includes its administrative and other districts, such as Hong Kong.
PS-MCDFX-0813
A company is considered to be “located” in a country
or a region if it has substantial ties to that country or region, including for example, if it (i) is organized under the laws
of that country or any country in that region; (ii) derives at least 50% of its revenues or profits from goods produced or sold,
investments made, or services performed, or has at least 50% of its assets located, within that country or region; (iii) has the
primary trading markets for its securities in that country or region; or (iv) is a governmental entity or an agency, instrumentality
or a political subdivision of that country or any country in that region.
The Fund seeks to provide a level of current income that is
higher than the yield generally available in Chinese equity markets over the long term. The Fund intends to distribute its realized
income, if any, regularly (typically semi-annually in June and December). There is no guarantee that the Fund will be able to distribute
its realized income, if any, regularly. If the value of the Fund’s investments declines, the NAV of the Fund will decline
and investors may lose some or all of the value of their investments.
The Fund’s objective is total return with an emphasis
on providing current income. Total return includes current income (dividends and distributions paid to shareholders) and capital
gains (share price appreciation). The Fund measures total return over longer periods. Because of this objective, the Fund expects
that it will primarily invest in companies that exhibit attractive dividend yields and the propensity (in Matthews’ judgment)
to pay increasing dividends. Matthews believes that in addition to providing current income, growing dividend payments by portfolio
companies are an important component supporting capital appreciation. Matthews expects that such companies typically will be of
medium or large size, but the Fund may invest in companies of any size. Matthews measures a company’s size with respect to
fundamental criteria such as, but not limited to, market capitalization, book value, revenues, profits, cash flow, dividends paid
and number of employees.
Principal Risks of Investment
There is no guarantee that your investment in the Fund will
increase in value. The value of your investment in the Fund could go down, meaning you could lose money. The principal risks of
investing in the Fund are:
Political, Social and Economic Risks:
The value of the
Fund’s assets may be adversely affected by political, economic, social and religious instability; inadequate investor protection;
changes in laws or regulations; international relations with other nations; natural disasters; corruption and military activity.
The economies of China, Hong Kong and Taiwan may differ from the economies of other countries, especially developed economies,
in many respects, such as rate of growth, inflation, capital reinvestment, resource self-sufficiency, financial system stability,
the national balance of payments position and sensitivity to changes in global trade.
Currency Risks:
When the Fund conducts
securities transactions in a foreign currency, there is the risk of the value of the foreign currency increasing or decreasing
against the value of the U.S. dollar. The value of an investment denominated in a foreign currency will decline in dollar terms
if that currency weakens against the dollar. While the Fund is permitted to hedge currency risks, Matthews does not anticipate
doing so at this time. Additionally, China may utilize formal or informal currency-exchange controls or “capital controls.”
Capital controls may impose restrictions on the Fund’s ability to repatriate investments or income. Such controls may also
affect the value of the Fund’s holdings.
Risks Associated with Emerging and Frontier Markets:
Many
Asian countries are considered emerging or frontier markets. Such markets are often less stable politically and economically than
developed markets such as the United States, and investing in these markets involves different and greater risks. There may be
less publicly available information about companies in many Asian countries, and the stock exchanges and brokerage industries in
many Asian countries typically do not have the level of government oversight as do those in the United States. Securities markets
of many Asian countries are also substantially smaller, less liquid and more volatile than securities markets in the United States.
Trading Markets and Depositary Receipts:
Asian securities
may trade in the form of depositary receipts, including American, European and Global Depositary Receipts. Although depositary
receipts have risks similar to the securities that they represent, they may also involve higher expenses and may trade at a discount
(or premium) to the underlying security. In addition, depositary receipts may not pass through voting and other shareholder rights,
and may be less liquid than the underlying securities listed on an exchange.
Volatility.
The smaller size and lower levels of liquidity,
as well as other factors, may result in changes in the prices of securities that are more volatile than those of companies in more
developed regions. This volatility can cause the price of the Fund’s shares (NAV) to go up or down dramatically. Because
of this volatility, it is recommended that you invest in the Fund only for the long term (at least five years).
Convertible Securities:
The Fund may invest in convertible
preferred stocks, and convertible bonds and debentures. The risks of convertible bonds and debentures include repayment risk and
interest rate risk. Many Asian convertible securities are not rated by rating agencies like Moody’s, S&P or Fitch, or,
if they are rated, they may be rated below investment grade (these are referred to as “junk bonds,” which are primarily
speculative securities, and include unrated securities, regardless of quality), which may have a greater risk of default. Investments
in convertible securities may also subject the Fund to currency risk and risks associated with foreign exchange rate. Convertible
securities may trade less frequently and in lower volumes, making it difficult for the Fund to value those securities.
Dividend-Paying Securities:
The Fund will invest in dividend-paying
equity or fixed-income securities. There can be no guarantee that companies that have historically paid dividends will continue
to pay them or pay them at the current rates in the future. The prices of dividend-paying equity securities (and particularly of
those issued by Asian companies) can be highly volatile. In addition, dividend-paying equity securities, in particular those whose
market price is closely related to their yield, may exhibit greater sensitivity to interest rate changes. The Fund’s investment
in such securities may also limit its potential for appreciation during a broad market advance.
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MATTHEWS CHINA DIVIDEND FUND
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Risks Associated with China, Hong Kong and Taiwan
China:
The Chinese government exercises significant control
over China’s economy through its industrial policies (e.g., allocation of resources and other preferential treatment), monetary
policy, management of currency exchange rates, and management of the payment of foreign currency-denominated obligations. Changes
in these policies could adversely impact affected industries or companies. China’s economy, particularly its export-oriented
industries, may be adversely impacted by trade or political disputes with China’s major trading partners, including the U.S.
In addition, as its consumer class emerges, China’s domestically oriented industries may be especially sensitive to changes
in government policy and investment cycles.
Hong Kong:
If China were to exert its authority so as
to alter the economic, political or legal structures or the existing social policy of Hong Kong, investor and business confidence
in Hong Kong could be negatively affected, which in turn could negatively affect markets and business performance and have an adverse
effect on the Funds’ investments.
Taiwan:
Although the relationship between China and Taiwan has been improving, there
is the potential for future political or economic disturbances that may have an adverse impact on the values of investments in
either China or Taiwan, or make investments in China and Taiwan impractical or impossible.
Risks Associated with Medium-Sized Companies:
Medium-sized
companies may be subject to a number of risks not associated with larger, more established companies, potentially making their
stock prices more volatile and increasing the risk of loss.
Past Performance
The bar chart below shows the Fund’s performance for each
full calendar year since its inception and how it has varied from year to year, reflective of the Fund’s volatility and some
indication of risk. Also shown are the best and worst quarters for this time period. The table below shows the Fund’s performance
over certain periods of time, along with performance of its benchmark index. The index performance does not take into consideration
fees, expenses or taxes. The information presented below is past performance, before and after taxes, and is not a prediction of
future results. Both the bar chart and performance table assume reinvestment of all dividends and distributions. For the Fund’s
most recent month-end performance, please visit matthewsasia.com or call 800.789.2742.
ANNUAL RETURNS FOR YEARS ENDED 12/31
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31,
2012
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Since Inception
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1 year
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(11/30/09)
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Matthews China Dividend Fund
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Return before taxes
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27.81%
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10.59%
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Return after taxes on distributions
1
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26.35%
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9.68%
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Return after taxes on distributions and sale of Fund shares
1
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18.28%
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8.67%
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MSCI China Index
(reflects no deduction for fees, expenses or taxes)
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23.10%
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1.91%
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1
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After-tax returns are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.
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Investment Advisor
Matthews International Capital Management, LLC (“Matthews”)
Portfolio Managers
Lead Manager:
Yu Zhang, CFA, has been a Portfolio Manager
of the China Dividend Fund since 2012.
Co-Manager:
Jesper Madsen, CFA, has been a Portfolio
Manager of the China Dividend Fund since the Fund’s inception in 2009.
Purchase and Sale of Fund Shares
You may purchase and sell Fund shares directly through the Fund’s
transfer agent by calling 800.789.ASIA (2742) or online at matthewsasia.com. Fund shares may also be purchased and sold through
various securities brokers and benefit plan administrators or their sub-agents. You may purchase and redeem Fund shares by electronic
bank transfer, check, or wire. A 2.00% redemption fee will be assessed on the sale or exchange of Fund shares within 90 days after
the date you purchase Fund shares. Please see page 76 in the statutory prospectus for more details. The minimum initial and subsequent
investment amounts for various types of accounts offered by the Fund are shown below.
Type of Account
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Minimum Initial Investment
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Subsequent Investments
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Non-retirement
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$2,500
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$100
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Retirement and Coverdell
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$500
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$50
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Tax Information
The Fund’s distributions are taxable, and will be taxed
as ordinary income or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or an individual
retirement account. Tax-deferred arrangements may be taxed later upon withdrawal from those accounts.
Payments to Broker-Dealers and Other
Financial Intermediaries
If you purchase Fund shares through a broker-dealer or other
financial intermediary (such as a bank), Matthews may pay the intermediary for the sale of Fund shares and related services. Shareholders
who purchase or hold Fund shares through an intermediary may inquire about such payments from that intermediary. These payments
may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund
over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.
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MATTHEWS CHINA DIVIDEND FUND
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